In recent days, there have been instances of Chinese cotton importers not honouring contracts with foreign cotton traders inked in previous months, which has created a breach of trust in the cotton trade.
One of the biggest reasons put forth by experts, is the continuous fall in cotton prices in recent months, which has made the Chinese cotton importers panicky.
Another reason is the inability of these cotton importers to open “Letters of Credit” (L/C) with their respective banks in time before the cotton cargo reaches Chinese ports.
The changes made in the sliding-tax on cotton imports by the government to be made applicable from January 2012, has also created uncertainty in the minds of the cotton importers.
The last but not the least, to avail benefits of the 2011 import quota, it is necessary that the cotton cargo is cleared by Chinese Customs on or before February 20, 2012.
Fibre2fashion News Desk - China